Asia-Pacific salary budgets inch up as organisations prioritise strategic talent investments

Organisations across the Asia-Pacific region are projecting a slight increase in salary budget allocations for 2026, with an average increase of 5.2% expected, according to the latest Salary Budget Planning Report by WTW. This marks a marginal rise from the 5.1% seen in 2025, signalling a measured approach to compensation in a dynamic economic landscape.

In Singapore, however, employers anticipate salary increase budgets to remain steady at 4% in 2026, a trend that has held consistent since 2024. The vast majority of organisations (97%) in the city-state are proceeding with their regular salary reviews this year, reflecting a cautious stance amidst ongoing global economic uncertainties.

“Although overall budgets remain stable, the real transformation is happening behind the scenes,” noted Gary Goh, Rewards Data Intelligence Practice Leader, Singapore, WTW. “Employers are becoming more strategic in how they distribute compensation, prioritise investments and define the results they aim to achieve. Rather than simply reacting to economic trends, organisations are proactively reshaping their approach to better align with broader business objectives, even in uncertain times.”

While the overall trend points to stability, individual organisational strategies for salary budgets vary. Two out of five organisations have seen a lower salary budget since the last pay cycle, primarily driven by anticipated recessionary pressures or weaker financial results (30%) and concerns related to cost management (25%). Conversely, 15% of organisations are projecting higher salary increase budgets, citing tight labour markets (22%), inflationary pressures (16%), and recalibrated pay due to lower increases in prior years (16%) as key reasons.

Beyond salary adjustments, organisations in Singapore are actively addressing workforce-related concerns. A significant 82% of organisations in Singapore plan to maintain their headcount within the next 12 months, a 10% increase from 2024. Furthermore, 12% intend to increase their headcount, double the proportion planning reductions (6%). Encouragingly, more organisations reported fewer problems attracting and retaining employees in 2025, with 66% indicating no or slight problems, up from 58% in 2023.

Employers are also fine-tuning their compensation programmes to supplement regular salary reviews and mitigate competitive labour pressures. Common actions include conducting compensation reviews of specific employee groups (54%), implementing targeted base salary increases for certain groups (39%), and enhancing the use of retention bonuses or spot awards (36%).

Complementary actions to address talent needs and support employees are also gaining traction. These include improving employee experience (78%), increasing training opportunities (68%), a broader emphasis on diversity, equity, and inclusion (60%), and enhancing health and wellness benefits (53%).

READ MORE: Doing more with less: Employers in Hong Kong rethink benefits as costs soar

“In a complex labour market marked by global economic challenges, employers are hedging against rising labour costs by proactively deepening investments in areas such as career development, health and wellbeing,” added Goh. “These actions have significant potential for long-lasting benefits to help address organisations’ mid- to longer-term talent needs and establish a resilient workforce as they continue to traverse these unpredictable times.”

Shai Ganu, Managing Director and Global Leader, Executive Compensation and Board Advisory at WTW, further highlighted regional employer concerns about losing critical talent, with change management, talent attraction, and employee experience emerging as significant issues. A recent WTW survey across Asia-Pacific revealed that organisations are adapting to economic shifts through various strategies, with cost reduction being a key approach. Nearly half are considering operational cuts, including reductions in headcount.

The survey also indicated a pivotal shift towards intra-Asia resilience, with 37% of organisations exploring new markets within Asia and 33% considering diversifying supply chains from the West to within Asia. While half of the organisations are not planning significant changes to their compensation plans, approximately a quarter are considering changes to incentive metrics (26%) or modifying performance goals to account for volatility (25%).

“These adjustments aim to align compensation with the new economic realities and maintain employee motivation and performance,” Ganu explained. “Additionally, the ‘From Asia – For Asia’ strategy is likely to impact trade and talent flows, impacting compensation outcomes within the region.”